How to cope with the cost-of-living crisis

The cost-of-living crisis has made 2022 a difficult year for many people. You might find that you have much less disposable income now: inflation has reached a 40-year high and fuel prices have also hit record levels too this year. In this context, it’s been harder for people in the UK to meet their financial obligations and save money. But how can you navigate through this year safely? Below, we explore how to cope with the cost-of-living crisis.

Why is the cost of living rising?

The cost of living is rising due to two main factors. For a start, there are the lingering economic issues caused by the pandemic. Economic growth has been slow since successive lockdowns. However, this situation has been exacerbated by Russia’s invasion of Ukraine. This has created a scarcity of some natural resources and goods. Ukraine was the fifth-highest wheat producer and the largest sunflower oil producer in the world. With fewer Ukrainian exports getting through, goods have risen in price due to their scarcity. This has contributed to widespread inflation that has outstripped wage increases – essentially, money isn’t covering what it used to for people in the UK.

Things you can do to cope with the crisis

Put together a budget

Putting together a budget is one of the best ways for you to cope with the crisis. Using an online tool can be helpful, but the process is usually always the same. Work out your incomings for each month, before calculating your essential outgoings. With your surplus income, you should spend this judiciously on a few luxuries as well as commit some towards savings and to an emergency fund.

Reduce spending

Reducing your spending can help too. If there are any unnecessary purchases you frequently make, you can try cutting down on these to give yourself more surplus income. Just go through your old bank statements to work out where you can cut spending.

Make your surplus income work harder

Making your surplus income work harder can be helpful too. Instead of carelessly spending your surplus, you should make paying off debt an urgent priority. If you don’t have debt, you could put this money in a savings account.

Pawnbroking

Some people might not have a significant surplus income though. If you’re struggling to make ends meet, another option is a pawnbroking loan to give you a short-term cash injection to pay off any bills you’re struggling with.

Coping with the cost-of-living crisis can be difficult mentally and practically. But by following the guide above, you should be prepared to navigate these difficult months and look after your finances.